Australian businesses continue to bear higher production costs as wholesale inflation hit a 13-year high in the 12 months to June, putting further pressure on inflation in the country.
of producer price index (PPI) rose 1.4% in the June quarter, following a 1.6% gain over the past three months.
Compared to the last 12 months, the index rose 5.6%, reaching its highest level since the December 2008 oil price shock.
PPI measures changes in the price of a product or service from the producer’s point of view.
This index is sometimes called the “Wholesale Price Index” and the Consumer Price Index is often called the “Retail Price Index”. Both indicators are important economic indicators that reflect price changes from different perspectives.
The Australian Bureau of Statistics reported that the increase in producer costs in the June quarter was mainly due to higher building construction output, higher oil fuel production and higher prices for heavy industry and civil construction.
Specifically, construction prices for buildings rose 3.9% during the June quarter, while input prices for home construction rose 17.3% over the past year due to higher prices for wood and metals.
Similarly, petroleum manufacturing prices rose 31.5%, while heavy industry and civil construction prices rose 2.8% in the three months to June.
Wholesale inflation remains high
Besa Deda, chief economist at St George Banking Group, said the PPI for the June quarter was “slightly softer” than the March quarter data.
“This is probably the peak,” she said in a comment obtained by AAP. “That’s…that’s what we hear from our customers.”
In light of new data, her bank has maintained its expectation that inflation will peak at 7.5% in 2023, she said.
Additionally, Deda said the situation was better than earlier this year, although supply chain disruptions persisted across the industry.
Sharing a similar view, AMP senior economist Diana Musina said transportation costs, air freight and container costs, and non-oil commodity prices fell.
However, she noted that the PPI for the June quarter was still higher than normal.
“There are more and more signs that inflation remains high, not just for consumers, but for many industries across Australia,” Mussina said.